The State of Pennsylvania tells us that if apportionments are not forthcoming, contractors in Pennsylvania will not be paid for some $80 million of work for which the State has already contracted. Plans to let $100 million this fall and the same next spring are being held in abeyance.

This action, combined with the current steel strike, would certainly make for economic chaos. That is the picture clear across the United States.

Highway construction is probably the best buy the public receives for its tax money today. Despite substantial increases in the past year in the prices of labor and equipment, average bid prices for Federal-aid highway construction in the second quarter of 1959 actually decreased 22 to 3 percent from the first quarter.

Competition for work continues to be extremely aggressive, with an average of seven bidders per project during the same period.

Your committee is considering several methods of meeting the financial crisis which has arisen in the highway program. There is some merit in almost every plan that has been advanced, and there are good precedents for most of the proposals. However, there are strong differences of opinion over the principal measures suggested, and the Congress therefore is faced with the duty of working out a solution to the crisis which will be most generally acceptable.

As is usually true of controversial legislation, this is likely to be accomplished only by compromise.

In the past, the Associated General Contractors of America has never offered advice to the Congress on highway financing, taking the position that it was the business of highway contractors to build roads, not to say how they should be paid for.

However, in view of the extreme urgency of the present highway financial crisis and the absolute necessity for a solution, the AGC wishes to say that, through its 125 chapters and branches, it will support any reasonable financial legislation which this committee recommends.

For example, our industry uses a large amount of gasoline, but we would not oppose an increase in the Federal gas tax if, in the committee's opinion, that is considered necessary. We do not share the views of those organizations which advocate and support an expanded highway program provided it involves no additional costs to the interests they represent.

In our opinion, the American public is willing to pay for the roads it uses. We think this is borne out by the fact that the American people are anxious to use the toll roads that have been constructed for them. Neither would we oppose any combination of gas tax and other methods under consideration here, including the issuance of short-term bonds, which has been proposed, and the dedication of additional highway user taxes to the trust fund. Of these proposals, we believe that the most reasonable approach would be to obtain part of the necessary funds by a gas tax increase, and the balance by dedicating other highway user taxes directly to the trust fund.

We feel also that the integrity of the trust fund should be protected, and that none of the money assigned to it should be diverted for purposes other than highway construction.

In conclusion, we urge that this committee develop the legislation necessary to assure the construction and completion of this vital

program in the most expeditious manner practicable, and we pledge our support to whatever financing measure the committee considers appropriate.

We assure you, on behalf of our association, that when legislation is passed which will keep the program on schedule we, the highway contractors of the country, will continue to furnish you completed highways, well built, on time and at the lowest possible cost to the public.

Thank you very much.

The CHAIRMAN. Mr. Miller, we thank you, sir, very much, for bringing to us the views of the Associated General Contractors of America. We appreciate your statement.

Mr. MILLER. Thank you, sir.

The CHAIRMAN. Are there any questions?

If not, thank you, sir.

Our next witness is Mr. Battles.

STATEMENT OF ROY BATTLES, ASSISTANT TO THE MASTER OF THE NATIONAL GRANGE

The CHAIRMAN. Please identify yourself for the record, by giving us your full name, address, and the capacity in which you appear. Mr. BATTLES. Mr. Chairman, my name is Roy Battles. I am assistant to the Master of the National Grange. The National Grange offices are located at 744 Jackson Place NW., Washington, D.C. The CHAIRMAN. You may proceed.

Mr. BATTLES. The National Grange wishes to be recorded against any increase whatsoever in the Federal gasoline tax. We believe there is a quick and satisfactory solution to the financing problem connected with the Federal highway program without a higher tax and without delaying the termination date of the program.

The basis for our position is to be found in the report of our committee on transportation as adopted at the last annual session of the National Grange in Grand Rapids, Mich., in November 1958. This position and report is the outgrowth of resolutions passed by the various State granges all over the United States.

The action taken reads as follows:

The benefits to be expected at both local and national levels from the highway program are too promising to permit hesitation in pushing it to completion. Nevertheless, it appears that the revenues programed for this purpose are not adequate to meet rising construction costs. In this dilemma several alternatives present themselves. One is to increase the Federal gasoline tax 2, or possibly 3, cents per gallon. The Grange opposes this proposal.

Highway users are already contributing to the highway trust fund, through special automotive excise taxes, to the amount of $2 billion a year. In addition, they are paying to the general fund other general and special taxes, and there are signs that taxes on highway users are approaching the point of diminishing returns. Therefore, the Grange reaffirms its opposition to further increases in automotive excise taxes for any purpose whatever.

Farmers as a group are particularly hard hit whenever the gasoline tax is increased. Transportation charges are paid by farmers on motor truck shipments of food and fiber from the farm and on production supplies, such as fertilizer, seed, binder twine, from machinery and equipment and feed.

An important part of the cost of transportation on products received and shipped by farmers is in the form of gasoline taxes. Such contribute to the cost squeeze in which farmers today find themselves. Automobiles are also essential to the farmer's life and business as they are the means of transporting their families to and from churches, schools, and shopping centers.

In addition to the foregoing reasons for our opposition to any increase in the Federal gasoline tax, we are convinced that the highway user should not be expected to shoulder the entire cost of constructing the Interstate Highway System because the national defense and the general welfare is clearly a charge to the general fund and not a speincrease of taxes of any kind on highway users.

Section 210 study authorized in the Highway Revenue Act of 1956, so we understand, has as its objective to determine the extent to which the various segments of our society should share in the cost of this program. Until this study is completed, there should be no increase of taxes of any kind on highway users.

We believe this is the time to give most careful consideration to Senate Joint Resolution 109, introduced by Senator Case of South Dakota, to the issuance of revenue bonds to cover the interim period roadbuilding funds as are needed until such time as adequate moneys are available from the highway trust fund. In this way the country will not be called upon to increase its national debt nor will this method interfere with any pending budgetary matters. Legislation of course will be required to enable the active continuance of the highway building program.

Support for issuance of revenue bonds separate and apart from bonds to be issued from the General Treasury may be found in the Clay Committee report which served as a basis for the writing of the 1956 Federal-Aid Highway Act.

In his message to Congress submitting the Clay Committee report, the President stated:

I am inclined to the view that it is sounder to finance this program by special bond issues, to be paid off by the above-mentioned revenues which will be collected during the useful life of the roads and pledged to this purpose, rather than by an increase in general revenue obligations.

We believe that with the proper amount of study a way could be developed to issue such revenue bonds against future receipts from the highway trust fund without further increase to the overall national debt of the Federal Government.

It should be remembered that this 41,000-mile proposed transcontinental highway system is a long-term capital expenditure which raises the question of whether it is logical to try to follow any pay-asyou-go plan.

From an accredited source comes the statement that there are now 68 million vehicles on the public highways. It is estimated that by 1970 the total will exceed 100 million.

The question, therefore, "Is the Nation running out of highways, and what is to be done if that is true?" takes on vital importance. We, as you can see, cannot afford to adopt any policy that will in any way delay the highway program adopted in 1956, when the FederalAid Highway Act was passed.

To summarize, because of present world conditions there can be no denial of the need for more and improved transportation facili

ties as an important adjunct to the entire defense effort. New and improved highways are one of the answers to these needs. More good roads are important to the Nation's continued growth and

economy.

Some interesting comments along the aforementioned lines were submitted by witnesses, including those from the Office of Civil Defense Mobilization, before a congressional committee last week. The advocated bond issue covering the interim period will not add to the national debt nor will it, in the final analysis, add to the Government's obligations or will such, in any manner, disrupt pending budgetary matters. It merely allows an important and a universally supported program, previously adopted, to provide for more and better highways to continue without further interruption.

New legislation should be quickly enacted to avoid stagnation of our highway program which will benefit both our urban and farm population. We are to state two objectives:

(1) Opposition to any increase in the gasoline tax; and

(2) We urge a program of action for quick enactment of a bond issue to further the good roads program.

In summary, with 850,000 people in the Grange, and speaking for them, I would like to say that farmers and all rural people have an important stake in the interstate highway program.

To our way of thinking, it is a very important program, and it is important that it is carried out to completion on time.

Our delegates assembled in annual session at Grand Rapids, Mich., in November 1958, and spelled this out in clear and unmistakable language. The delegates also set in force certain other policies which we would like to call to your attention at this time.

The Grange is opposed to any increase in the Federal fuel tax. It believes that the final decision of how to raise the money to keep this program on schedule should be delayed until the 210 report is completed, and this date of completion is scheduled for January 1961. Because of the defense and general welfare aspects of the Interstate Highway System, we believe that there is ample justification for using general revenue funds to help pay for this program.

It is the viewpoint of the Grange, however, that the use of limited interim highway trust fund revenue bonds is a logical and sound way to meet the deficits that now appear on the immediate horizon, until we can get the advantages of the 210 report. These bonds could be repaid from existing revenues flowing in to the trust fund when the income into that fund began to exceed the outgo, which would be in the late sixties.

The Grange believes that the Interstate Highway System is a longterm capital investment, and, as such, might well utilize some borrowed funds.

That is my statement, sir.

The CHAIRMAN. Mr. Battles, we thank you, sir, for bringing us the views of the National Grange. We appreciate your cooperating with the committee the way you have.

Mr. BATTLES. Thank you.

The CHAIRMAN. Thank you very much.

Are there any questions?

If not, thank you.

Our next witness is Mr. Martin.

Mr. Martin, will you identify yourself for the record, by giving your name and the capacity in which you appear?

STATEMENT OF MAURICE MARTIN, DIRECTOR OF HIGHWAYS, STATE OF KANSAS

Mr. MARTIN. My name is Maurice Martin. I am director of highways for the State of Kansas.

First, gentlemen, I want to state that the Governor of Kansas and its highway commission urge the Congress to continue the interstate and ABC programs at the rate set out by the Federal Aid Highway Act of 1956.

I appear today to express our views concerning the financing for the continuance of this vital project. We realize that additional revenues may be needed to keep the program on schedule. We believe that the answer is a return to the basic provisions of the Highway Revenue Act of 1956 as contained in the version that was passed by the House. This provided for the use of repayable advances chargeable against future tax revenues accruing to the highway trust fund during the latter years of the program. We do not believe that additional highway user taxes at the Federal level should be imposed but that present highway user funds now being diverted should be placed in the trust fund. I am told that this amounts to about $1.5 billion per year.

These two methods are suggested for your earnest consideration. Millions of people will benefit from this network of highways other than the ones who drive on it. Any slowdown of any kind would have a very harmful effect on the Nation's economy. Let's not let that happen.

The CHAIRMAN. Thank you very much.

Are there any questions?

If not, thank you.

Our next witness is Mr. Larson.

STATEMENT OF CHARLES R. LARSON, PRESIDENT, NATIONAL RURAL LETTER CARRIERS' ASSOCIATION

The CHAIRMAN. Mr. Larson, will you identify yourself for the record, by giving your full name, address, and the capacity in which you appear?

Mr. LARSON. Mr. Chairman and members of the committee, my name is Charles R. Larson. I am president of the National Rural Letter Carriers' Association, whose address is 1040 Warner Building, Washington, D.C.

The CHAIRMAN. You are recognized, Mr. Larson, and you may proceed with your statement.

Mr. LARSON. The National Rural Letter Carriers' Association is an organization representing 36,700 regular, substitute, and retired rural letter carriers of the United States.

I sincerely appreciate the opportunity of appearing before this committee and expressing our views on the subject of the highway trust fund and the various proposals under consideration by this committee with reference to the financial position of this fund.